How Value-Based Care Ties to Physician Performance

By Claire Thayer, January 28, 2016

A recent survey by the Deloitte Center for Health Solutions finds that over the next 10 years, physicians expect as much as 50% of their compensation will be directly tied to value-based care (VBC). Developing accountability as well as physician support are essential components of VBC payment models. The Deloitte survey highlights these key factors in protecting physicians’ financial interests:

  • 61% Limits to total financial risk exposure
  • 46% Equitable, performance-based distribution of bonuses from shared savings
  • 43% Ability to help set performance goals

Political and technical challenges exist in accurately measuring physician performance. In measuring physician quality, the Agency for Healthcare Research and Quality points out that resolving the issues listed below is critical to getting the consistent and valid results necessary for public reporting:

  • Rules for attributing patients to individual physicians
  • Methods for aggregating data from different sources
  • Methods for creating composite scores
  • Calculation of benchmarks and assignment of peer groups for comparing physician performance
  • Processes for auditing/validating results

These and other issues on how value-based care ties to physician performance were the focus of a recent MCOL infographoid, highlighted below:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.


Doing Different Differently

By Kim Bellard, January 28, 2016

I was all set to write about bacteriophages, then I realized that what appealed to me about them was as an example of attacking mainstream problems with non-mainstream solutions. So I decided to write more generally about how organizations are trying to encourage that.

Let's start with IBM. Big Blue is trying to reinvent itself as a company that uses "design thinking" to develop products and services.

Their design principles emphasize "making users your North Star," using collaborative multidisciplinary teams, "restless reinvention," and a continuous loop of "observe/reflect/make."

So far, about 10,000 employees have gone through the design bootcamp, and around 100 products have been developed using design thinking. Those are drops in the bucket for IBM, but the approach is an audacious and long overdue attempt for IBM to stay relevant in a millennium in which Apple has reminded companies about the importance of design.

Or take Microsoft. If there is any doubt that Microsoft is well on its way to doing things differently, look at the Surface Book or Surface Pro, each of which has won rave reviews. CEO Satya Nadella has been shaking things up ever since he took over two years ago.

One of Mr. Nadella's actions was to break up Microsoft's Research group, which had been kept separate from the day-to-day action. Bloomberg reports that Mr. Nadella has insisted that the research teams work hand-in-hand with the product teams to get new ideas into actual products quicker.

Mr. Nadella has emphasized, "we need to be open to new ideas, and Microsoft Research is where they will come from." This attitude led to Skype Translator becoming an actual product within three months of Mr. Nadella learning about the underlying research.

Venture capitalist Anshu Storm has a theory -- "stack fallacy" -- that he believes explains why so many big companies fail to innovate. The theory posits that many companies suffer from the "mistaken belief that it is trivial to build the layer above yours." 

He cites how Apple has built great devices but also has missed on simple apps, or IBM's classic blindspot about letting Microsoft own the OS layer that ran their PCs.

In his view, "Product management is the art of knowing what to build." The trouble is that too many companies focus on the how and not enough on the "why."

For example, think about hospitals. They're trying hard to position themselves as patient-centered health systems, but no one who has been in a hospital can believe that hospitals see patients as the customer. Hospital gowns? Waking patients up in the middle of the night to take vitals? Corridors upon winding corridors?

We need the health care experience to be less like health care and more like things we actually like. Nick de la Mare suggests that hospitals (and schools) "should be more like theme parks," and that designers should be aiming for "magical experiences."

That's the attitude we need to be taking as we try to innovate; it's not just doing more, but really rethinking the overall consumer experience. I was particularly struck by Mr. de la Mare's caution: 

The trick is to deploy technology strategically and sparingly, since new tools tend to introduce unintended complexities....A hospital patient may feel similarly overwhelmed by impersonal and bureaucratic processes that seem to serve the health care provider at their expense. Just because we have the technology to do something, doesn’t mean we should.

There is cool innovation going on within health care. David Chase, for example, raves about how Zoom+ (which I've written about before) has revamped the ER experience, and there is no shortage of other health care companies hoping to be disruptive (e.g., Becker's list of 30).

There is plenty of incremental innovation going on, and health care sure can use it, but I continue to be on the lookout for breath-taking innovation -- innovations that surprise, excite, and delight.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting


Revisiting the Health Cooperatives Morass

By Clive Riddle, January 22, 2016

A new Wall Street Journal article, Obama Administration Works to Fix Health Insurance Co-Ops, covered Andy Slavitt’s - acting CMS administrator – testimony to the Senate Finance Committee regarding how to recoup federal loans from failing co-ops, how so many co-ops failed, and what future fixes are planned for the cooperatives, including reducing funding restrictions. A graphic accompanying the article re-hashes the $1.5 billion lent to co-ops that have failed, which range from $265 million in New York to $60.6 million in Oregon. Yesterday’s edition of Inside Health Policy  reported that Slavitt has indicated risk adjustment changes proposed for 2017 may come sooner. The natural fallout from the failed and failing cooperatives continue to surface in the news. For example, this week it was announced the failed Kentucky Health Cooperative was placed in liquidation.

What CMS can do to mitigate the tenuous position the remaining cooperatives are in is news. But the bulk of current media discussion of cooperatives continues to beat the dead horse of the number of failed cooperatives, their cumulative losses and unpaid federal loans, all which was significantly covered in the fall. There was plenty of blame to go around: co-ops underpricing themselves in the market, CMS policy restricting their abilities to capitalize, CMS risk adjustment policy and congressional reduction in funding for said policy. The dead horse will continue to be beaten in the news – after all it is an election year.

But perhaps a more fundamental issue that wasn’t talked about enough was simply that start-up health plans are going to initially lose significant amounts of money in new markets even under the best of circumstances, and the start-up losses weren’t adequately budgeted, capitalized or communicated in setting stakeholder expectations.

If you’re keep tabs of the continuing status and travails of the cooperatives, two sites are worth bookmarking: U.S. Health Policy Gateway's Co-op Performance by State and the National Conference of State Legislature’s Health Insurance Purchasing Cooperatives and Alliances: State and Federal Roles.


Henry Loubet on Three Immediate Trends Impacting 2016 Healthcare

By Clive Riddle, January 15, 2016

What’s in store for 2016? Henry Loubet, Chief Strategy Officer for Keenan, tells us “The business of health care has experienced both evolution and revolution through the decades. Innovation and transformation are driving dramatic developments in the health care industry at a rapid pace these days. While the major insurers' merger and acquisition activity will draw plenty of speculation about the health care landscape, I believe there are other, more immediate trends that will influence policy and financial decisions in 2016.”

Henry Loubet

Here’s three trends Henry points to for 2016:

The 2016 Election could potentially hold transformative Affordable Care Act impacts, with a new President and approximately 470 seats in the House and Senate to be decided. We don't know who will ultimately occupy those offices or whether the partisan balance will spell the possibility of the ACA being modified or repealed. Even with a strong Republican shift, there are significant barriers to repealing a law that now provides health insurance to millions of Americans. Some elements that would be easier for Congress to change about the ACA include risk corridors reimbursement, Cadillac Tax modification or deferral, or provisions affecting Medical Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

Disruptive start ups will continue to alter how health care is delivered as more members of the Millennial generation become health care consumers and entrepreneurial purchasers. Companies like Oscar, Zenefits, and Omada Health all appeal to those who are most comfortable functioning in a connected environment. These organizations have realized growing valuations as they've acquired market share at unprecedented rates. Their approach to care access should make telemedicine more mainstream, promote adoption of wearable devices for wellness and condition management, and expand utilization of "minute clinics" and other alternative treatment venues.

Not frequently discussed, but a growing area for health care is the application of non-occupational medical, pharmacy, and wellness/condition management principles to workers' compensation. Inflationary increases in occupational medical have prompted steps toward implementing drug formularies, preferred provider networks, and wellness/population health management as risk management strategies to reduce paid claims as well as the incidence and severity of workers' compensation claims. Though maybe not in 2016, we will be monitoring whether the line between occupational and non-occupational medical becomes less distinct or eventually eliminated.

Henry’s comments originally appeared in in MCOL’s December-January 2016 issue of ThoughtLeaders


“Fateful Eight” Trends to Watch in 2016

by Clive Riddle, January 8, 2016

With apologies to Quentin Tarantino, here are a “Fateful Eight” collection of trends to watch in the business of healthcare for 2016, in no particular order:

1. Prescription drug slice of the cost pie

While the overall healthcare cost trend has been relatively fit and trim for more than a decade, prescription drug costs are consuming a growing portion of the healthcare cost pie, and threaten to send the entire cost structure back to more obese levels.  Watch for a continued shift in priorities and resources towards managing this sector. A December MCOL e-poll on managing prescription costs, co-sponsored by Keenan, found that 41% of respondents felt the prospects for managing prescription costs going forward will be somewhat difficult and challenging, and 56% felt the prospects will be very difficult and challenging. 71% would place a higher priority on dedicating new or additional resources in managing prescription costs, compared to dedicating resources to managing other components of health care costs, and another 16.5% would place the highest priority in this regard.

2. Aftermath of health plan consolidations

There really can’t be the same level of mega health plan mergers in 2016 to follow up on the 2015 Aetna-Humana; Anthem-Cigna; and Centene-HealthNet deals, because we’re running out of separate mega health plans to merge with each other. But 2016 is a key year regarding health plan mergers none the less, as regulatory review of these deals gathers steam, individual health plan markets shake out, and the merged mega plans unveil a more detailed vision of health plan life post-merger.

3. Onward march of health system m&a

But merger and acquisition activity will still flourish in 2016, on the health system side, particularly as systems continue paths towards integration as they acquire and manage more and more medical group practices.

4. Private sector embrace of two ACA concepts

For all the political pushback the ACA continues to experience, its noteworthy that two ACA concepts have morphed over into the healthcare private sector with gusto.  Private health insurance exchanges and commercial accountable care arrangements have both evolved from the ACA primordial stew to become significant private sector initiatives that will play in increasing role in 2016.

5. Pay for Value Initiatives

But as significant as the rise in public and private accountable care arrangements have been, the biggest action in the provider reimbursement and care delivery arena is cast in the wider net of pay for value. While encompassing a range of type of initiatives, all things pay for value will be what to watch for in payer-provider relationships in 2016.

6. Healthcare Political Theatre

It’s a presidential election year. ACA opponents will continue pushing back on all possible fronts. While public opinion polls show the country is still quite divided on the ACA, polls also show it is slipping some in relationship to priority of other national issues.  But this won’t stop healthcare from being a featured actor in political theatre for 2016, casting ripples of uncertainty for the prognosis of the healthcare environment post-2016.

7. Quiet but big adoption progress for all things mHealth

Perhaps all the big things that can be said for the moment about mHealth have been said. While 2016 might not be the year that big new, new shiny things will be touted to change the face of healthcare forever, a more quiet revolution will take place in 2016 as more and more consumers continue to adopt various apps and technologies that are out there already, just waiting to gain traction.

8. The ever growing burden of consumer cost sharing

The ever upward spiral in the burden of consumer cost sharing is not news. Perhaps though, this growing burden might relate to the parable about the frog in the frying pan, who just sits there if the temperature is just increased one degree at a time. While things aren’t boiling over yet, the pace of marketplace and regulatory reactions to this issue should pick up in 2016.